Planting Seeds For Rural Drivers

May 29, 2009|-Don Lee, Tribune Newspapers

CHUZHOU, China - — Like everybody else in his farming village, Zhan Changchun used to get around on a bicycle. This month, the 29-year-old walked into a local dealership, pulled out $7,300 in cash from his leather satchel and drove away with the family's first car: a seven-seat Wuling micro minivan that's jointly produced by General Motors.

The Zhans drained their life savings and borrowed from relatives, bold moves in a slowing economy.

But they couldn't resist a slew of government incentives: a 50 percent sales tax reduction, elimination of hundreds of dollars in road maintenance fees, plus the biggest of them all, a 10 percent rebate for rural residents buying vehicles with engines smaller than 1.3 liter.

It's all part of Beijing's campaign to "Send Automobiles to the Countryside," an effort to speed rural development and boost domestic consumption at a time when foreign demand for manufacturing exports is slumping.

"Government policy is good these days," said Zhan. "I never thought I could buy a car."

While new vehicle purchases in the U.S. plunged 37 percent in the first four months of this year, they jumped more than 9 percent in China, to 3.8 million units, with record volumes in March and April.